The combined results of New Zealand’s four largest meat industry players are pointing to the news that this season has been the best the sector has seen for ten years. Between them, Richmond Meats, Affco, PPCS and Alliance posted pre-tax and interest profits of NZ$112m, twice that of 1999, on combined turnover of NZ$3.8bn, up NZ$566.4m from last year. The results are a welcome relief after a particularly difficult decade in farming, and are due to a profitable mix of factors.
Fall in the dollar key
It appears fair to say that the fall in the dollar over the last few months was a decisive factor in the ability of Affco to more than double its 1999 results and post a post-tax profit of NZ$15.1m in the nine months to September. Similarly, such favourable economics allowed PPCS to announce post-tax profits up from NZ$10.8m to NZ$18.8m and Alliance’s post-tax profit to reach NZ$27.2m after 1999’s NZ$19.2m.
In perhaps the most ostentatious increase, Richmond converted a NZ$852,000 loss last year into profit of NZ$11.65m.
Grass roots livestock growth
At the grass roots level, this year has also experienced particularly high growth rates for livestock throughout the country. Carcase weights have been high, and the annual survey conducted by the Meat and Wool Economic Service (MWES) revealed that lambing percentages hit near record levels.
During the spring of this year, lambing increased by 1.6% on last year to reach 115.9% and an estimated 35.8m lambs were born, a figure similar to 1999. The MWEC has said that prices will probably fall as supplies of lamb increase, however it is expecting levels to remain as they were about 12 months ago. For farmers, this means, according to service director Rob Davison: “Provincial New Zealand looks set to prosper during the coming year as these good lamb prices coincide with good prices in the beef and dairy industries.”
Export demand strong
Meat industry bosses are hoping to capitalise on the good results of this year by increasing exports to Europe, and are urging the New Zealand government to stress to the EU that its produce is not contaminated with either BSE or scrapie.
The implications of the European mad cow crisis on the New Zealand meat industry are not yet clear. Consumer perceptions of meat safety may impact sales worldwide, and it is possible that the European Farm Council will demand a ban on meat and bone meal in all farm animals’ feed, damaging a trade in meal to Europe worth millions annually.
The Meat Industry Association is anxious not to get caught up in the EU measures to deal with BSE and thus are stressing the BSE-free aspect of its meat, in the hope that the industry will prosper rather than suffer in the light of the European beef scare.